The economic effects of carbon tax policy in British Columbia
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Date
2024-07
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University of New Brunswick
Abstract
This study examines the impact and underlying mechanisms of carbon tax policy on employment in British Columbia using data for 10 Canadian provinces spanning from 1997 to 2021 and a Difference-in-Difference (DiD) model. Our findings reveal that under reasonable carbon tax rates, the imposition of such taxes stimulates increased investment in clean technology research and development by enterprises, leading to a significant reduction in carbon emissions. However, the influence on economic development appears to be statistically insignificant. Moreover, the rate of adjustment in carbon tax rates plays a pivotal role in achieving sustainable economic growth. As a result, to attain a steady-state economy under carbon emission constraints, policymakers should consider a balanced approach to carbon tax rate adjustments.